17 August 2015

‘Make in India’ meets the Biological Diversity Act

by Dr. Amitavo Mitra

‘Make in India’ is a flagship, nation-wide initiative of the Government of India launched in September 2014. Under this initiative, the government has identified 25 key sectors for attracting foreign investment in order to develop indigenous expertise, create jobs, and encourage intellectual ingenuity. Some of the key sectors identified under this initiative, and pertinent with regard to generation of intellectual property and applicability of the Biological Diversity Act, 2002 (referred to as "Act"), are biotechnology, food processing, pharmaceuticals and leather.

The biotechnology industry in India is the third biggest industry of its kind in the Asia-Pacific region, and is poised to grow more than 20 fold by 2025 to become a USD 100 billion industry, a staggering 30% growth for the next decade. Tax and customs incentives are being provided in the biotechnology arena to spur growth and innovation. In the pharmaceuticals sector, India is expected to be the third largest pharmaceutical market by 2020, the growth being driven by the burgeoning population, awareness and demand for access to better healthcare. India’s manufacturing strength in generics is already well known.

In 2012, India was ranked number one in the world in production of perishable consumables such as mangoes, bananas, chickpea, ginger, goat milk, buffalo meat, and okra. It ranks second in production of sugarcane, wheat, and lentils among others. Given the increasing upward mobility of the middle class, India represents a unique opportunity for development of new plant varieties and modern science driven methods in food science.

The leather industry in India produces 2B sq. ft. of leather annually, accounting for 10% of world output. This is supported by a strong base for raw materials, wherein India is endowed with 21% of the world’s cattle and buffalo population.

It is to be appreciated that a common denominator among the sectors under the ‘Make in India’ initiative is up to 100% FDI in the sectors via various routes, availability of a world-class talented work force, competitive R&D costs, investor friendly policies and the promise of bureaucratic efficiency that otherwise for long has plagued both private and public investment and growth in India.

India has a robust Intellectual Property Rights regime, evidenced by the fact that it is signatory to various international treaties such as Paris Convention Treaty, Madrid Protocol, Budapest Treaty, Berne Convention and Washington Treaty. In the past decade, the Indian Patent Office has seen a steady increase in number of patent filings. Though foreign entities dominate in terms of sheer numbers in the patent arena (about 4:1), it is encouraging to see that domestic inventors are slowly but surely realizing the importance of intellectual property and its value proposition with regard to being globally relevant and competitive.

However, a potential elephant in the room is the Biological Diversity Act, 2002 (BDA). The BDA was enacted in 2002 by the Parliament of India to meet the obligations under the “Convention on Biological Diversity” (CBD), to which it is a signatory. As of 2012, State Biodiversity Boards (SBB) have been created in 26 States along with 32,918 Biological Management Committees across India. Out of the 26 SSBs, 15 have also notified state-wise rules.

The objective of the Act is not to deter or disincentivize use of the rich diversity in natural biological resources of India, but to ensure that such use is not exploitative in nature, detrimental to the socio-economic needs of country or to the people of the area from where the biological resource is accessed. The Act envisages benefit sharing in a multi-modal manner, namely (not limited to), joint ownership of IP rights, tech transfer, monetary compensation or non-monetary compensation.

The scope and extent of the ambit of the BDA can be appreciated by a mere perusal of the definitions section in the Act. Section 2(c) of the Act defines “biological resources” as plants, animals and micro-organisms or parts thereof, their genetic material and by-products (excluding value added products) with actual or potential use or value, but does not include human genetic material, while Section 2(d) defines “bio-survey and bio-utilization” as  survey or collection of species, sub-species, genes, components and extracts of biological resource for any purpose and includes characterization, inventorization and bioassay. Further, Section 2(m) defines “research” as study or systematic investigation of any biological resource or technological application that uses biological systems, living organisms or derivatives thereof to make or modify products or processes for any use.

In the field of biotechnology, food processing, pharmaceuticals, and leather, it is conceivable that any R&D activity with potential for generation of IPR would fall completely or partially under the scope of the BDA.
While individuals who are citizens of India or bodies registered in India (without non-Indian participation) need only “notify” SSBs for accessing any biological resource, or bio-survey and bio-utilization for commercial utilization (Section 7), anybody else, including a citizen of India who is a non-resident as defined in Section 2(30) of the Income-tax Act, 1961 is required to seek prior approval from the National Biodiversity Authority (Section 3). Interestingly, by design or otherwise, entities falling under Section 3 have to seek prior approval for both research and for commercial utilization.

The Act also restricts transfer of results of research to Individuals or entities covered by Section 3(2) of the Act and there are also restrictions on transferring  further any biological resource  or knowledge without prior approval of the National Biodiversity Authority (Sections 20, and 19).
While the Act has been in effect since 2004, it is interesting to note that as of 2012 only 105 Benefit Sharing Agreements have been signed. These numbers though unusually low, could be due to a multitude of reasons, such as, delay in notifying various guideline, lack of enforcement, lack of awareness, etc.

It will be interesting to see, moving forward, how the various entities under the ‘Make in India’ campaign, designed to enhance inflow of FDI into Indian sectors, and further integrate India into the global economy, remain in compliance with the law of the land, in particular the Biological Diversity Act.
With regard to IPR, the Biological Diversity Act, under Section 6 envisages that no person shall apply for intellectual property right, in India or outside without obtaining the previous approval of the NBA for any invention based on any research or biological resource obtained in India. Some leeway is provided wherein, an application for patent made, may be allowed by the Indian Patent Office (IPO), but sealing of the patent will be deferred until approval is sought and provided by the NBA. India has traditionally been regarded as an agrarian economy and unsurprisingly, anyone seeking intellectual property protection of a plant variety under the Plant Variety Protection and Farmer’s Rights Act, 2001 is exempt from Section 6 of the BDA. It is seen that the current patent practice at the IPO is to keep issuance of patents in abeyance until NBA approval is provided to the Patent Office.

With regard to IPR which includes research, and wherein the ultimate goal is commercial utilization and monetization of the IPR generated, it is of critical importance that there is harmonization among the workings of the NBA, SSBs, the IPO, and interested public and private parties in order to maximize the potential of the various sectors such as biotechnology and pharmaceuticals, while at the same time ensuring that the biological resources of India are not exploited for the profit of a few.
The BDA and ‘Make in India’ can truly complement each other to promote organic growth and improvement of the socio-economic status of its people, while at the same time contribute to the collective intellectual capital of the country, and maintain its rich biological diversity for future generations to enjoy.

[The author is a Senior Associate, IPR Practice, Lakshmikumaran & Sridharan, New Delhi]

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